Thursday, July 14, 2011

Billions of dollars of diamonds

Shore Gold’s feasibility study issued

PRINCE ALBERT — Shore Gold Inc., which is exploring for diamonds in the Fort a la Corne are east of Prince Albert, issued it’s feasibility study Thursday for the combined Star — Orion South kimberlites.

The study shows a net present value (NPV) of $2.1 billion (using a 7 per cent discount rate) for an internal rate of return (IRR) of 16 per cent before taxes and royalties and an after-taxes and royalties NPV of $1.3 billion with an IRR of 14 per cent.

Pre-production capital cost is estimated at $1.9 billion with a total capital cost of $2.5 billion (including direct, indirect costs and contingency) over the life of mine and an initial capital cost payback period of 5.3 years.

The project timeline assumes that a detailed design planned to commence in second half of 2011, permitting activities to support a third-quarter, 2012 construction start, SaskPower supply to the site in the fourth quarter of 2013 and processing plant commissioning about four years after acquiring the necessary permits to proceed with construction.

The Star — Orion South kimberlites include the 100 percent Shore owned Star Diamond Project, as well as Star West and the Orion South Kimberlite, which fall within the adjacent Fort à la Corne Joint Venture among Shore Gold Newmont Mining Corporation of Canada Limited.